The Bhotai Industrial Building in Tuen Men is among the properties being sold (Image: Google Maps)
Emperor International, the property development and investment arm of Hong Kong-based conglomerate Emperor Group, has agreed to sell a portfolio of retail, residential and industrial properties across Hong Kong to a vehicle controlled by Emperor Group founder and chairman Albert Yeung Sau-shing, as the HKEX-listed property firm seeks to ease its HK$20.2 billion debt burden.
A private discretionary trust controlled by Yeung is acquiring the 131,401 square foot (12,208 square metre) portfolio, which comprises a number of retail and residential units in Causeway Bay, Tsim Sha Tsui, and Kennedy Town as well as a pair of adjacent industrial buildings in the Tuen Mun area, for a consideration of HK$1.15 billion ($148 million), in addition to assuming HK$1.56 billion worth of intercompany borrowings related to the properties.
“After a regular review of the business operation of its investment portfolio, the Group is of the view that the Properties are regarded as non-core investment properties with limited chances of further substantial value appreciation by transformation or redevelopment exercises,” Emperor International said in a filing. “Therefore, the management considered the Disposal a good opportunity to crystallise the value of the Properties.”
The disposal, which is subject to shareholder approval, comes after Emperor International recorded its fifth consecutive year of losses in the fiscal year ended March, with those losses largely driven by fair value markdowns on its investment properties.
Strengthening Financial Position
The consideration is based on the net asset value of the portfolio’s holding company, which reflects the properties’ combined fair market value of HK$1.14 billion as of 15 July, as well as HK$1.56 billion worth of borrowings and interest owed to Emperor International by the holding company. A bank loan of HK$93.3 million is also set to be fully repaid upon completion.
Emperor Group chairman Albert Yeung Sau-shing (Getty Images)
Emperor International does not expect to book any gain or loss on the disposal. The company will use 90 percent of the transaction proceeds for strengthening its financial position, preparing for future investment opportunities and enhancing its investment portfolio’s return, with the remainder earmarked for general working capital including staff costs, professional fees and other general administrative and operating expenses.
“The Disposal will release net proceeds of approximately HK$1,153.2 million (subject to adjustments) and enhance its financial position of the Group and save up additional reserve for backing up its investment opportunities in the future,” Emperor International said.
The portfolio’s holding company logged revenue of HK$22.5 million and an after-tax net loss of HK$97.7 million in the fiscal year ended March.
Asset Sales
The portfolio is the latest set of assets to be sold to Yeung since 2023, with the company having also offloaded the Fitfort Shopping Arcade in North Point and the Lane Up retail and office complex in Tuen Mun to Yeung’s trust last year for HK$1.94 billion and HK$1.14 billion, respectively.
In May, the company sold a 69-unit apartment building in the Soho area of Central district to Emperor Entertainment Hotel Limited, the HKEX-listed hospitality unit of Emperor International for HK$655.2 million. That same month, the company also sold two units in a Chai Wan industrial building for HK$100 million.
Emperor International also announced in April the formation of an investment fund backed by an unnamed third party limited partner, with the company set to include some of its investment properties into the vehicle, which will be managed by a unit of Emperor International serving as the fund’s general partner.
The company’s investment property portfolio had a book value of HK$33 billion as of March, including properties under development, with assets located across Hong Kong, Macau, the mainland Chinese cities of Beijing and Xiamen, as well as London.
Among that portfolio’s largest assets by floor area are a pair of Emperor Group Centre office buildings in Hong Kong’s Wan Chai district and Beijing’s Chaoyang district, which house Emperor Group’s Hong Kong and mainland China headquarters respectively, as well as The Pulse shopping centre in Repulse Bay.
The company’s holdings also include the China Huarong Tower and GF Tower office blocks in Wan Chai, as well as the Ampersand office and residential building on London’s Oxford Street.
On Monday, a 9,694 square foot luxury villa at the developer’s 15 Shouson residential project in Hong Kong Island’s Deep Water Bay sold for HK$717.4 million, with the transaction’s HK$74,000 per square foot price marking the city’s most expensive first hand residential sale so far this year. Emperor International jointly developed that project with mainland builders CC Land Holdings and Mingfa Group as well as Hong Kong-based developer CSI Properties.
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